Newly public Red Rock Resorts, Inc. on Tuesday announced that its Station Casinos LLC has entered into a definitive agreement to acquire the 710-room Palms Casino Resort in Las Vegas for US$312.5 million.
Factoring in anticipated synergies, the company estimates that the Palms will generate US$35 million in EBITDA during its first full year of ownership, resulting in an implied multiple of 8.8 times EBITDA for the transaction. The company expects the acquisition to be accretive to earnings per share and free cash flow positive in first full year of operations. The deal is expected to close Q3 2016.
Private-equity firms Leonard Green & Partners and TPG bought a majority of the Palms in 2011 that allowed the resort’s high-profile developer George Maloof to keep operating the property.
Station Casinos was taken private in 2007, managed through bankruptcy court, filed for an IPO last October and went public in April as Red Rock.
“The Palms is a hybrid gaming property that is uniquely positioned to benefit from the strong economic trends in Southern Nevada and record visitation levels in Las Vegas,” said Red Rock Resorts Executive Vice President, Chief Financial Officer and Treasurer Marc Falcone. “With our experience owning and operating other hybrid offerings in Las Vegas, it is a compelling strategic addition to our portfolio.”